Silver recently hit a record high of $89.11 before pulling back and closing with a 2% gain. It is currently trading at $86.91 after bouncing back from a daily low of $83.45. The overall uptrend in Silver continues as it approaches the $90.00 mark. However, RSI divergence indicates that the momentum might be weakening, suggesting that the recent rise could be excessive. The most likely direction for Silver appears to be upward, with resistance points at $87.00 and $88.00. Support levels are at $86.23 and $85.50, with a possible lower limit at $80.00. Silver is a popular precious metal known for its value retention and use as currency. Traders often choose silver for its inherent worth or as a hedge during inflation. Several factors affect Silver’s price, including geopolitical issues and interest rates. The strength of the US Dollar is crucial since Silver is priced in dollars. Demand from industries, particularly electronics and solar energy, also impacts Silver’s price. Economic activity in the US, China, and India further influences price changes. Silver generally follows Gold’s trends as both are considered safe-haven assets. The Gold/Silver ratio shows the relative value of the two metals and can suggest whether Silver or Gold is undervalued. In January 2025, silver prices soared to nearly $89.00 before losing momentum. This surge was highlighted by technical divergence that hinted at exhaustion—a lesson traders are applying in today’s market. Currently, with silver trading around $48.00, the emphasis is on stability and value rather than pursuing record highs. The economic landscape has changed dramatically since last year’s peak. The Federal Reserve adopted a stricter stance in late 2025, strengthening the US Dollar and pushing the DXY index from 101 to over 104, which has created resistance for precious metals. This marks a shift from the weak dollar scenario that fueled Silver’s rise early in 2025. Additionally, industrial demand has decreased from last year’s aggressive growth. Reports from the fourth quarter of 2025 indicated a slowdown in Chinese manufacturing and an oversupply in the global solar panel market, contrasting with the strong industrial demand that drove Silver’s ascent previously. For traders dealing in derivatives, this new environment requires a different strategy than the one used during the 2025 rally. The Gold/Silver ratio has widened to nearly 85, significantly above the historical average, suggesting that Silver may be undervalued compared to Gold. This makes strategies such as buying long-dated call options an appealing and cost-effective way to position for a potential market correction. With prices now in a more defined range, implied volatility has decreased from last year’s dramatic fluctuations. This change makes selling options a viable income-generating strategy. Traders are now selling cash-secured puts below crucial support levels around $45.00, aiming to either collect premiums or purchase Silver at a better price.

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